Monday, March 28, 2011

10 Celebs Who Hate Paying Taxes

Question: What do Wesley Snipes, Joan Baez, Val Kilmer and Dionne Warwick have in common?

Answer: A profound aversion to paying taxes.

Readers of TJN's blog at BSchool.com have asked us to share the following posting. You can find the original here.

It makes no sense that celebrities don't pay their taxes. They often get paid an exorbitant amount of money to do what they do; it really shouldn't be a problem to set aside a chunk for Uncle Sam, who has proven by now that he doesn't like it when you hold out on him. Most perplexing of all is the fact that these people are, you know, famous. They're high-profile people, raking in wealth in a very public way. Did they think they could just pretend not to have the money?

We all saw the movies, heard the music, and watched the shows. We know how well you're doing. Socking away an extra million in the mattress and then claiming ignorance is just sad. Let this be a lesson: you're never too big to pay your bills, especially where the federal government is concerned.

1. Wesley Snipes: Even winning a Blockbuster Entertainment Award can't keep you out of hot water with the feds. Wesley Snipes had a decent career going for a while: comedies like Major League and White Men Can't Jump, sexy-but-not-really thrillers like Rising Sun and Murder at 1600. Plus who can forget the prescient vision of Demolition Man? Unfortunately, by the mid-'00s, most of his work was releasing straight to DVD. Either as a cause or effect, he started running into money troubles. He was hit in 2006 with charges of conspiracy and tax fraud, as well as multiple counts of a willful failure to file his income tax returns. This was the beginning of Snipes' long road to ruin. He was found innocent of conspiracy but guilty of failure to file his return, and in April 2008, he was sentenced to three years in prison. Appeals were rejected, and in December 2010 he reported to prison in Pennsylvania, where he'll be housed until July 2013. Hang tough, Willie Mays Hayes.

2. Joan Baez: Of all the celebs to ever skirt tax law, Joan Baez is one of the least surprising. In the late 1960s, a number of high-profile artist signed the Writers and Editors War Tax Protest pledge, promising to withhold income tax in protest of the Vietnam War, but Baez beat them to it. In 1964, the folk singer took a public stand against the man by refusing to pay most of her taxes. True, a 100 percent withhholding might have had more punch, but still, refusing to pay the IRS 60 percent of what you owe them is going to get you in the papers. That was also the year Baez founded the Institute for the Study of Nonviolence, and she also encouraged concert attendees to resist the draft. She was not, to put it kindly, the Johnson administration's favorite person.

3. Nicolas Cage: What do you know, the guy capable offreaking out like this turned out to have some instability in his personal life. Nicolas Cage, nee Nicolas Kim Coppola, nee Nicolas "Fruitcakes" Coppola, has been a major star for a couple of decades now, owing largely to his volcanic personality and willingness to don a bear suit and beat up women (on screen, of course). But it's the mighty that fall the hardest, and after a series of major real estate purchases and sales starting in 2004, Cage ran into tax trouble. In July 2009, the IRS filed papers in Louisiana claiming unpaid federal taxes, claiming that he'd stiffed them for more than $6 million in 2007. Later that year, Cage sued his business manager for fraud, effectively saying that it was all the manager's fault that the government never got their checks. The manager filed a counter-complaint (yep) that said, essentially, that Cage was spending money like a madman, investing everything in real estate and a certain type of lifestyle that was flashy but profitless.

4. Joe Francis: Running afoul of the law is never fun, but there's something grimly pleasing about seeing the book get thrown at Joe Francis, who became famous for aiding the exploitation of college girls on Spring Break by giving them T-shirts in exchange for letting him film them make out and fool around. Yes, Francis was the mastermind behind Girls Gone Wild, a video franchise that at one point raked in $40 million a year. In 2007 Francis graduated with an indictment of federal tax evasion from a Nevada grand jury. The Department of Justice claimed that he took more than $20 million in deductions he didn't earn, and when the location shifted to California, Francis pleaded not guilty. Long story short: he got arrested for not showing up to his hearing, then eventually pleaded guilty in September 2009 to filing false tax returns. That November, the IRS placed a lien of almost $34 million on his accounts for failure to pay taxes from 2001-2003. Maybe he can pay them in plastic beads?

5. Sinbad: Sinbad seems like such a nice guy, you know? His stand-up comedy is family-friendly and laced with nostalgia, and his TV and movie appearances — A Different World, Houseguest — are similarly broad. But the guy's made some bad spending choices, and he's made the issue worse by not taking into account how much he actually owed the federal government. In 2009, he made news as one of the worst tax debtors in the state of California, owing more than $2.5 million (!) in personal income tax. It got so bad that the comedian declared bankruptcy, stating he had only $50,000 in assets but up to $50 million in liabilities. (For the non-accounting majors out there, that's a bad ratio.) In early 2010, he put his home upfor sale to start whittling away at the debt. Let this be a lesson: no matter how awesome people tell you your parachute pants are, you should always save money for a rainy day.

6. Richard Hatch: Even by the standards of celebrity ignorance, this is a bone-headed move. Richard Hatch was the first winner of Survivor here in the U.S., a pop culture feat that came with a $1 million prize. For reasons no one will ever be able to understand, Hatch didn't declare his winnings when filing his taxes for that year, perhaps hoping that his accountant wasn't a fan of reality TV. Even dumber, he apparently didn't declare the $321,000 he earned from promotional radio appearances. There's only one way this could have ended: punishment. Hatch was indicted in September 2005 and found guilty of tax evasion the following January. In May 2006, he was sentenced to 51 months in prison, but in May 2009, he was released to serve a term of home confinement. He got in more trouble (yes, more) for giving unauthorized interviews while under house arrest, finished his sentence in October 2009, and found himself back in court in December 2010 for — you guessed it — failing to file federal tax returns. On March 11, 2011, he was sentenced to 9 months of prison time to be followed by a couple years of supervised release.

7. Dionne Warwick: How did Dionne Warwick not see this one coming? (Zing!) After a lengthy career as a singer, actress, and professional spokesperson for a totally reputable group of psychics, Warwick was revealed to be quite the tax delinquent. A 2009 story disclosed that she owedmore than $2 million to the government. At the time, her representative said that Warwick was working to pay off the debt, though she's also apparently been spending a lot of time in Brazil.

8. Pete Rose: Weirdly, Pete Rose's personal income tax issues feel like the least of his concerns, at least from the standpoint of rehabilitating his image from the shellacking it got when he confessed to gambling on baseball games (including those featuring his own Cincinnati Reds) and getting permanently banned from baseball. In 1990, Rose fessed up and pleaded guilty to charges of filing false income tax returns. He'd made money from selling autographs and from gambling on horse races — the man's got a style, that's for sure — and in July 1990, Rose was given five months' time in an Illinois prison and fined $50,000. He saw release the following January, but his debt to society wasn't repaid until he'd logged 1,000 hours of community service and paid more than $360,000 in back taxes. Way to go, Charlie Hustle.

9. Val Kilmer: Val Kilmer's off-screen persona — well-meaning,slightly bonkers — has lately come to overshadow his on-screen career. Once one of the hottest leading men in Hollywood, he's recently been spending a lot of time on his New Mexico ranch. Perhaps because of his increasingly tenuous ties to his old life, he hit some rough patches recently, particularly with regard to tax law. At the end of 2010, it was revealed that he owed almost half a million dollars in back taxes, the result of which was a lien placed against his ranch. The property was put up for sale with an $18.5 million price tag, and though that's a steep asking price just to rest your head in the home of the star of Real Genius, it's also a discount from the previously proposed $23 million.

10. Nas: Nas — who beefed with Jay-Z and had a baby with Kelis — is just one of the many musicians to get rich and forget to cover his assets. In fall 2009, news broke that the IRS had placed a lien against his property for a staggering $2.5 million and change, asserting that he didn't pay his income tax in 2006 or 2007. Considering he's already shelling out $50k a month to Kelis for child support, this was probably not a welcome development for the rapper. Over time, though, the story got worse: an update in January 2011 revealed that he owed more than $6 million. His story is an unfortunate one, but a reminder that he and others who've been hit with such bills have brought the problems on themselves. It's not like he woke up one day and was suddenly $6 million in the hole. If you don't pay what you owe, the IRS will come after you. Period. This tax season, be sure to claim your earnings, file a clean return, and be honest. Anything else is just suicide.

Thanks again to the bloggers at BSchool.com. If anyone else wants to prepare similar posts for celebs in other countries (and let's face it, celebrity tax cheats are fairly prolific these days) feel free to send your post to us - with all the relevant back-up please.

1 Comments:

Strange that you would include Joan Baez on your list. She withheld taxes that were funding a war that was against her Christian principles. And she gave most of her money away. This is a morally different issue than those who withhold taxes to enrich themselves.

Links to this post:

About Me

The Tax Justice Network (TJN) is an international, non-aligned network of researchers and activists with a shared concern about the harmful impacts of tax avoidance, tax competition and tax havens.
www.taxjustice.net